Zhitong Finance learned that Novo Nordisk (NVO.US) announced financial results for the first quarter. According to financial reports, Q1 revenue was 65.35 billion Danish kroner, up 22.4% year over year. Earnings per ADR were DKK 5.68. The Danish pharmaceutical giant reported a 28% year-on-year increase in net profit to DKK 25.4 billion (US$3.65 billion), higher than the DKK 23.7 billion forecast by LSEG survey analysts. Earnings before interest and taxes (EBIT) for Q1 were DKK 31.8 billion, higher than the DKK 29 billion forecast by analysts in this week's LSEG survey, up 27% year over year.

Novo Nordisk on Thursday reported first-quarter profits that exceeded expectations, thanks to a surge in market demand for diet pills. Last year, Novo Nordisk became the company with the highest market capitalization in Europe due to the huge success of diet pills. Negelle Morris, the company's senior vice president, said this week that the company Wegovy's supply in the US has quadrupled since December last year; at least 20,000 new US patients are starting injections every week, which reflects the company's efforts to increase production.

Sales of Q1's best-selling diet drug Wegovy more than doubled to DKK 9.38 billion, but fell short of analysts' expectations. At a fixed exchange rate, sales of Novo Nordisk weight loss care products, including Wegovy, increased by 41% in the first quarter of this year, reaching 11 billion kroner.

Initial US doses were boosted as the company invested billions of dollars to boost Wegovy's production to meet explosive demand. The company said that in the first quarter of this year, Wegovy was approved in the US to reduce cardiovascular risk for obese people, and total sales in North America increased 35%. Novo Nordisk CEO Lars Fruergaard Jørgensen said in a statement: “We are pleased with the increase in sales in the first three months of 2024 due to increased demand for our GLP-1 medicines for diabetes and obesity treatments.”

This slight increase in guidance and performance that exceeded expectations highlights Wegovy's success and Novo Nordisk's leading position in the rapidly growing diet pills market. Against the backdrop of Wegovy's huge success, Novo Nordisk's supply was curtled—it was unable to meet the huge demand for weekly injections. John Rountree, managing partner of pharmaceutical consulting firm Novasecta, believes that the company's performance is full of “outstanding performance.” “Really, there are no expectations other than continued growth and significant growth,” Rountree said.

However, the company is also facing intense competition from US competitor LLY.US (LLY.US), as the company is launching its Zepbound therapy in new markets. It was launched in the US in December last year, and this year in Germany, Poland, and the UK. He added that as more competitors enter the market and drug patents expire, it will be important for the company to maintain high R&D spending and innovation. Novo Nordisk faces competition from companies such as US pharmaceutical giant Eli Lilly in the weight loss treatment market, as well as a series of large and small companies seeking to enter this market. Novo Nordisk said it remains the global leader in GLP-1 drugs, with a 55% market share; the obesity treatment market could soar to over $80 billion by 2030.

At a time when Novo Nordisk and Eli Lilly compete for dominance in the weight loss market, increasing production is a key element of the company's strategy. The pharmaceutical company doubled its investment in production capacity this year to around $6.4 billion. This figure does not include plans to spend $11 billion to acquire three factories originally belonging to contract manufacturer Catalent Inc. The company expects capital expenditure to remain around DKK 45 billion in 2024; currently, free cash flow for the full year is expected to be DKK 570 to 67 billion.

Second, demand for this weight loss blockbuster and its sister drug Ozempic for diabetes prompted the Danish company to raise expectations on Thursday, saying sales could soar 27% this year and operating profit could increase 30%. Last month, Novo Nordisk's positive test data for an experimental novel diet drug further boosted the company's market value. Recent findings have also given the company a boost. Earlier this month, an EU regulatory investigation found no link between taking Wegovy or Novo Nordisk's diabetes drug Ozempic and an increased risk of suicide and self-harm.

Looking ahead, Novo Nordisk raised its revenue and operating profit growth guidelines. The company currently expects a sales growth rate of 19-27% in 2024 based on a fixed exchange rate (previously 18%-26%), and an operating profit growth rate of 22-30% based on a fixed exchange rate (21%-29% previously).